The document details food and beverage cost control management processes, emphasizing the importance of effectively utilizing limited resources such as people, money, and products to meet organizational objectives. It outlines the management functions involved in planning, organizing, staffing, supervising, controlling, and evaluating, along with tools for budgeting and calculating standard beverage costs. Additionally, it discusses the implications of budgeting in forecasting revenue, determining profit requirements, and projecting expenses within food and beverage operations.

1. Food and
Beverage
Cost
Control
COSTING

2. THE CONTROL FUNCTION
Control is one of the most important function
Managers uses resources to obtain the organization’s objectives.
Management : using what you have , to do what you want to do.
Food And beverage managers are responsible for eight types of
resources: people , money , products, time , procedures , energy ,
facilities and equipment

3. CONTROLL FUNCTION
All resources are limited and therefore must be utilized wisely.
Objectives of food and beverage operation include: Profit / loss levels,
maintain / increase financial strength during changing social and
economic times, guest concerns , management and employee interest ,
professional obligations and societal concerns

4. MANAGEMENT AS A PROCESS
Specific Management functions include:
Planning: defining organizational goals / objectives that can be
measured objectively and outline broad course of action that will help
to achieve goals
Organizing: assembling staff and other human resources and develop
channels of communication needed to carry out plans
Coordinating: assure that the positions and activities that have been
organized work together

5. MANAGEMENMT AS A
PROCESS
Staffing : select, orientate , train and evaluate people
Supervising: effectively managing personnel to ensure that they are
productive
Controlling: develop standards and collect information to compare
actual to expected performance so that corrective action can be taken .
Evaluating : determining the extent to which the objectives set were met

6. SEQUENCE OF PLANNING
Six management tools involved in planning:
Vision : broad and abstract of what the company should be like
Mission: specific statement of what is to be done and how it will be done
Long Range Plan: desired goal in a specific time ( 5 yrs)
Business Plan : specific plans as to what will be achieved in a year
Marketing Plan : indicates specific procedures that will be used to
accomplish business plan
Operating Budget: details revenue to be generated from the marketing
plan.

7. CONTROL PROCESS
Control procedures can help managers:
Determine whether delegated tasks are carried out correctly
Assess the effectiveness of change required by the economy
Identify problems early
Determine where problems are occurring
Identify mistakes and lead actions to correct these

8. CONTROL PROCESS
Control process begins with the establishment of standards , then
accurate information about the actual results achieved by the operation
must be gathered, and having corrective action taken
Establish standard ----- measure actual results----compare actual
results--- take corrective action----evaluate corrective action.

9. FACTORS TO CONSIDER WHEN
DESIGNING THE CONTROL
PROCESS
Accuracy :
Timeliness : must provide evidence of performance as soon as the
business activity occur
Objectivity: measures of performance must be accurately reflect the
desired results that control measures are designed to monitor
Consistency:
Priority
Cost : must be cost effective
Acceptability
Flexible

10. DETERMINING FOOD AND
BEVERAGE STANDARDS
Systems for developing food and beverage standards must begin with
the menu.
Once the menu is created five standard cost control tools can be
developed:
Standard purchase specification
Standard Recipes
Standard Yields
Standard portion Size
Standard portion cost

11. CALCULATING STANDARD
PORTION BEVERAGE
MANAHTTAN – NAME OF DRINK
1.Drink sales price: $4.00
2.Drink cost: 0.53
3.Drink cost percent : 13.3 %
Ingredients : Whisky .. Size . 33.8 oz( bottle size ).. Cost 9.65..size.. 1.5 oz
( amount of ingredients)
Vermouth.. 25.4 oz..$2.69....0.75 oz
Biters ... 16 oz...$4.56.. 0.01 oz
Cherry ... 0.10 oz
Water .. 0.75 oz

12. CALCULATING STANDARD
PORTION BEVERAGE
Calculating ingredient cost :
To determine cost of the whisky used in the ingredient .
step 1. Cost per ounce = bottle price / # of ounces in bottle. 9.65/ 33.8=
$0.286
NB: some people deduct 2 oz for spillage / evaporation
Repeat process for all ingredients in the Manhattan drink.

13. CALCULATING STANDARD
PORTION BEVERAGE
Step 2. calculate ingredients cost
cost per ounce x # of ounces that is used in the recipe.
$0.286 x 1.5 oz = $0.429 or 0.43 ( rounded)
Repeat this process for the other ingredients.
Step 3: total the cost of each ingredients.
In this case $0.53

14. CALCULATING STANDARD
BEVERAGE COST
Step 3: calculate the drink cost percentage
This expresses the how much of the drink sales price the drink cost
represents ( $4 )
Drink cost percentage = cost of the drink / selling price x 100
$0.53 / $4 = 0.133
0.133 x 100 = 13.3 %
Nb: beverage control has two addition controls glassware and ice size.

15. COMPUTER APPLICATION :
RECEIPE MANAGEMENT
several receipe management software can be used
Food service computer system has the following: ingredient file , standard recipe file , menu item file
Steps in calculating standard beverage cost:
1.Establish all cost tools: standard price, purchase specs, recipes, yields, portion size, portion cost , glassware ,
ice
2.Select time period for analysis
3.Inform all affected staff members: bar tenders , f & b servers . Let them know the reason for the study
( determine cost expectation for accounting, record keeping , control process. Why is the study important
( how is operation , what Is in it for them ( cost saving). Implications for study and procedures
4.Set rules for study period
5.Before the study take inventory
6.Maintain record of cost of all liquor
7.Record any transfers from the bar
8.Calculate the standard beverage cost

16. BUDGETS
This is created several months prior to the start of the fiscal food and
beverage operation year.
There are three major steps for budget development :
1.Calculate Projected Revenue Levels: this is an estimate. This is based
on number of guest anticipated for the period covered by the budget.
Revenue forecast is determined by multiplying the number of
anticipated guest by the amount of average guest cheque. Factors to be
considered when determining estimate revenue includes revenue
history, current factors , economic variables , spending patterns

17. BUDGETS
2. Determine the profit requirement : there are two basic ways to view
profit “what is left over from revenue after subtracting expenses” and
treating it as a cost. The traditional way is the first of the two. As a cost
the profit requirement are determined before estimating expenses,
therefore property pays itself first. Revenue – Required profit =
allowable operating expenses.

18. BUDGETS
3. Calculate projected expense levels: once revenue is estimated and
profit requirements are determined, expenses required to generate the
projected level of revenue can be estimated. These expenses include
cost of food sold, labour expense, supplies expense , utilities, market
expense, rent , depreciation expense, insurance expense etc. Cost can
be fixed or variable

19. ESTIMATING EXPENSE LEVELS
1 Simple mark up method: this is the most common for calculating food
and beverage operating expenses. This is based on the current expense
level. This amount is increased /decreased to arrive at the new expense
level for the operating budget.
Example : current food cost $135,000 and a 12% cost increase is
anticipated for the next budget. The adjusted food cost for the next
budget is

20. BUDGET
STEP 1. CALCULATE THE ANTICIPATED COST INCREASE.
Current months food cost x cost increase = ACI
135,000 x .12 = $16,200
STEP 2. CALCULATE ADJUSTED FOOD COST
Current month food cost + anticipated cost increase
135,000 + 16,200 = $151,200

21. BUDGET
2. Percentage method
3. Zero based budget calculation

22. CALCULATING MENU SELLING
PRICES
There are several types of methods used when calculating menu selling
price:
Subjective pricing method
Simple mark up pricing Method
Contribution pricing method
Ratio pricing methods

23. CALCULATING ACTUAL FOOD
AND BEVERGAE COST :
MONTHLY
Developed from using the same set of information used to develop
financial operating statements.
Total food and beverage revenue = Total food + total beverage revenue
1,030,000 + 257,500 = 1,287,500
To calculate the total % of revenue by each revenue centre , divide the
revenue for the revenue centre by the total food & beverage revenue x
100

24. CALCULATING FOOD COST :
MONTHLY
i.e. Food revenue % = food revenue / total food and beverage revenue x
100
1,030,000 / 1,287,500 x 100 = 80 %
This means that 80 % of the overall revenue was accrued from the food
operation

25. COST OF SALE
The basic monthly cost of sale for food and beverage is as follows : cost
of sale = beginning inventory + Purchases – ending inventory .
Example : Food Beverage
Beginning Inventory 124,500 36,800
Purchases + 85,000 29,500
Ending Inventory - 112, 250 27,500
Cost of sale 97,250 38,800

26. COST OF SALE
The food and beverage cost percentage is calculated by dividing the
cost of sale by the revenue amount and multiplying by 100 .
Based on the above information assume that food revenue is 284,500
and the beverage revenue is 154,500. calculate the food cost % and
beverage cost %?

27. INFORMATION FOR BASIC
COST OF SALE CALCULATION
Beginning inventory ( physical inventory forms last month)
Purchases : daily receiving report
Ending inventory ( physical inventory form end of current form )